State taking small steps to fight predatory lending

Government is at its best when it provides for our defense and protects us from those who would try to hurt us. Laws are meant to shield people from those who would seek to take advantage of others.

Tennessee didn’t have an adequate law to guard against so-called predatory lending. Unfair lending practices usually are pushed by companies that specialize in loans for people who have trouble getting money the conventional way.

Unfair lending practices include hidden charges, nondisclosure of important information until closing and misleading statements. When they refinance home loans they can get thousands of dollars in cash. As interest rates go up, broker’s fees are added onto the loan balance and payments increase. And if they can’t make the higher payments, they can lose their property.

Gov. Phil Bredesen signed into law a bill to stop most predatory lending practices like those. Legislators all know horror stories of people in their districts victimized by unscrupulous lenders taking advantage of unsuspecting people who learn the hard way not everyone can be trusted.

The new law restricts high-interest lenders from charging excessive fees and from offering to refinance loans sooner than two and a half years into the loan. Those small steps will go a long way to stop predatory lending practices and restore trust to a business that in too many cases is sorely lacking in it.